Koenigsegg bails

Koenigsegg pull out of buying Saab from GM

Koenigsegg has bailed out of its deal to buy Saab from GM. This appears to leave the Swedish carmaker orphaned.

Do not confuse this broken deal with what happened at Vauxhall-Opel, where it was GM that pulled out of a deal to sell, not the buyer. GM decided it needed Vauxhall-Opel to maintain its presence in this vital continent, and to keep hold of the huge engineering resources in Germany.

Saab is different. It has never made money for GM, and it doesn’t really contribute a whole lot to GM’s global engineering expertise that can’t be found elsewhere in the empire. Neither does it greatly bolster GM’s economies of scale in the way Opel/Vauxhall does.

What now then? Either a new buyer will need to be found double-quick, with Saab probably kept on life-support by the Swedish Government until the deal is sealed.

Or Saab will be closed.

Among possible last-minute buyers is Beijing Auto Industry Co. It made a bid for Saab but was rebuffed in favour of Koenigsegg. It then agreed to buy 10 percent of the new Koenigsegg-Saab Group. Now it’s saying it will ‘cautiously reconsider’ a full bid.

But let’s look at history. When MG-Rover was in British hands and going downhill, its Chinese buyers simply waited until MG-R went bankrupt and then got all they wanted for next to nothing. That was a lot cheaper than buying the company as a going concern.

So it’s possible the Saab name will fall into Chinese hands, but only after the Swedish operation has shut.

Koenigsegg says it pulled out for a variety of reasons, but won’t say what those reasons are. Time was one: with all the delays over contract, the dealers were rapidly disappearing. It’s also possible that not all of the proposed finance actually came together.

Or maybe Koenigsegg simply came to realise that it had bitten off more than it could chew. The car business is immensely complex and difficult for small players that aren’t part of larger groups. Saab is less than a tenth of the size of BMW or Mercedes, for instance. And it only sells about a hundredth of the cars that the VW Group, which includes arch-rival Audi, notches up.